Bullboard buzzes as Connacher prices equity offering

Oil sands company Connacher Oil and Gas (TSX: T.CLL, Stock Forum) said Wednesday that it has priced an equity offering announced last week, saying that it will issue 166,750,000 common shares at 90 cents each.

The company says it has also agreed to grant the underwriters an over-allotment option to purchase up to an additional 25,012,500 common shares, exercisable up to 30 days from the closing of the offering.

If the over-allotment option is exercised in full, total gross proceeds of the offering would be $172,586,250.

Connacher says the net proceeds of the offering will be added to working capital to fund its capital expenditures and for general corporate purposes, which may include a portion of the capital costs associated with the construction of its second 10,000 bbl/d steam assisted gravity drainage oil sands project once a decision to reinstate construction at its Algar project and drill 15 SAGD well pairs is made.

In conjunction with the offering, Connacher says it is in negotiations with a Canadian bank to secure a revolving working capital facility and a construction loan for Algar.

On the company’s Bullboard, one of the three most posted Bullboards on Stockhouse Wednesday morning, shoooter noted: “wow, that's some dilution, on the ohter hand, it's a bunch of cash as well, so is it a buy at .90?[sic]”

And, as part of a longer post, Stockhouse member PUNJABI said: “CLL has agreed to issue up to 191.7 million shares. That is close to the existing float of the company of 211 million outstanding shares. If there is enough demand for the shares the company will almost double the size of the float. This is massive dilution & at a very low price. The float of the company could become 402 million shares about 48 % of the total shares at the low price of $.90. Too bad for investors who have cost price over $2.00 to $5.00[sic]”…

Shares of Connacher Oil and Gas were down 1.9% to $1.02 Wednesday, with over five million shares traded.